Lenders freeze Fujian Nuoqi deposits as hunt for chairman continues

PUBLISHED : Wednesday, 20 August, 2014, 11:27am
UPDATED : Thursday, 21 August, 2014, 12:39am

Troubled mainland menswear retailer Fujian Nuoqi said several banks had frozen its deposits and demanded repayment of 454.5 million yuan (HK$573.4 million) in loans.

Facing cash flow and debt problems, Nuoqi said it had decided to remove its missing chairman, Ding Hui, as a director because of recent unauthorised acts that "prejudice the company's assets and constitute breaches of directors' duties".

"The board wishes to notify shareholders, investors and the market that Mr Ding Hui shall no longer have any authority to act or execute documents for and on behalf of the company," it said.

"The company has been trying to contact Mr Ding Hui but has not been successful. The company will continue to do so using all available means of communication."

Nuoqi reported Ding's disappearance to the police on July 23 and said he had transferred HK$291 million in cash out of the company's accounts shortly after its HK$319.5 million initial public offering in January. The company is unable to make cash dividend payments to shareholders.

The company also said cash deposits with various banks, including Xiamen International Bank, China Minsheng Banking Corp and Shandong Trust, had been frozen because the lenders were demanding repayment of a combined 454.5 million yuan in loans.

The lenders said Nuoqi had acted as guarantor or pledged securities for the loans but the company said it was unaware of the loan arrangements.

The deposits freeze has led to cash-flow pressure and the company said it had to close some unprofitable shops. It also decided to sell inventories at its remaining shops instead of buying new stock for the upcoming season. Some suppliers have suspended deliveries.

Trading in Nuoqi shares has been suspended since July 23. Ding's elder brother, Ding Canyang, has been running the company since July 25.